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The market mood has soured as investors focus on inflation fears rather than signs of cooling down. The dollar is off the lows ahead of the US JOLTs figures and speeches from Fed officials. Cryptocurrencies are on the back foot.
China reported an increase of 6.8% in the annual Producer Price Index (PPI), higher than expected. Rises in commodity prices have been attributed to the leap, the highest since October 2017. On the other hand, the Consumer Price Index (CPI) remained tame due to increases in pork prices recorded in 2020.
Concerns of rising inflation have been spooking markets, weighing especially on US tech stocks. These fears replaced the calm following the downbeat Nonfarm Payrolls figures, which showed the US economy is not overheating. Tensions around mounting ahead of April’s CPI figures due out on Wednesday.
The German ZEW Economic Sentiment is projected to show an increase in business confidence as Europe advances with its vaccination campaign. UK Prime Minister Boris Johnson announced additional loosening of measures from Monday.
Federal Reserve officials, including John Williams, Lael Brainard, Mary Daly and Raphael Bostic are set to speak later in the day. They will likely repeat the bank’s message that inflation is temporary.
Pipeline: Gasoline supplies to the US East Coast are still strained due to a ransomware attack on Colonial Pipeline. The firm is working to resume normal activity by the end of the week, recovering from a more potentially originating from Russia.
Cryptocurrencies have been consolidating their losses after correcting lower from their highs on Monday. Bitcoin is changing hands at around $55,000, Ethereum is below $4,000, XRP under $1.50 while Dogecoin stands out by moving higher.
EUR/USD is falling towards 1.2120 and may later start a new correction to reach 1.2147, thus forming a new consolidation range around the latter level. Possibly, the pair may break the range to the downside and resume trading downwards with the target at 1.1860.
After extending the ascending wave up to 1.4148, GBPUSD is consolidating below this level. Possibly, today the pair may fall to reach 1.3847 and resume growing with the target at 1.4000.
USD/JPY is correcting towards 109.17 and may later start a new decline to break 108.66. After that, the instrument may continue trading downwards with the target at 107.60.
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